In One of Arab World’s Largest Equity Raisings Since Start of 2011, EFG Hermes Investment Banking Raises USD 462 mn for a Greenfield Petroleum Refinery Project Led by Citadel Capital
The leading investment bank in the Arab world serves as placement manager for the largest equity raising of any form in Egypt since 2007, helping to raise USD 462 million for the equity component of a financing deal for a US$ 3.7 billion a greenfield petroleum refinery project that will halve Egypt’s diesel import requirements, result in more than USD 300 million in additional direct benefits to the state annually, and spur job creation
EFG Hermes, the leading investment bank in the Arab world, is pleased to announce that the EFG Hermes Investment Banking Division acted as Equity Placement Manager for Egyptian Refining Company (ERC), raising 42 percent of the USD 1.1 billion equity component required for financial close on the project, which is building a USD 3.7 billion greenfield refinery in the Greater Cairo Area.
Investment Banking raised equity of USD 462 million for the company’s USD 1.1 billion equity base that, together with a USD 2.6 billion global debt facility, will help finance this mega project.
The Investment Banking Division sourced the equity funds by tapping into a broad spectrum of investors — strategic and financial, regional and international.
“That in today’s difficult market environment, our Team was able to source nearly half a billion dollars in equity from a wide range of investors is a clear reflection of our unrivaled network and ability to attract the right mix of investors to suit our clients’ needs,” said Karim Awad, Head of Investment Banking at EFG Hermes.
The equity raised by EFG Hermes Investment Banking as part of the ERC transaction stands as the largest equity raising effort (whether in IPO or private placement form) in Egypt since late 2007.
“This transaction further underscores the Division’s proven ability to attract foreign direct investment to Egypt and the Arab world even amid the exceptionally difficult circumstances the country has seen in recent months,” Awad added. “It is also a testament to our ability to continue to deliver solutions for our clients even in the most challenging market conditions as we have now closed seven deals across five markets since January 2011.”
EFG Hermes Investment Banking has recently advised on one of the GCC’s largest public-to-private transactions, and it’s first private-equity-backed take-private transaction, and has also advised on the first demerger in the MENA region. The division has advised on mergers and acquisitions worth more than USD 30.8 billion since the beginning of 2011, including regional and cross-border transactions in the United Arab Emirates, Italy, Tunisia, Sudan and Egypt.
ERC, a platform company of Cairo-based private equity firm Citadel Capital, is one of the largest-ever project finance transactions in Africa and is among Egypt’s largest-ever inward investments. The public-private partnership will produce over 4.1 million tons of refined products and high-quality oil derivatives per year, including more than 2.3 million tons of Euro V diesel (the cleanest-burning diesel fuel in the world).
As an import substitution project, ERC will result in more than USD 300 million of direct annual economic benefits to Egypt. It will address Egypt’s growing demand for diesel and reduce its current level of imports by approximately 50%.
“ERC is more than one of Africa’s largest-ever project finance deals, it is also a transformative development for the Egyptian economy,” said Citadel Capital Founder and Chairman Ahmed Heikal, noting, “The financial close of ERC was in part made possible by the dedicated efforts of EFG Hermes Investment Banking, which served as placement manager. This transaction underscores to international investors and the global community that Egypt is open for business. The signal this sends is huge.”
Added Heikal, “ERC is a key component of Egypt’s energy security going forward.
We are delighted to have led an investment that is part of the solution to a number of Egypt’s present-day challenges. ERC’s refining process will reduce the nation’s present-day SO2 emissions by 29.1% and will deliver projects with positive social impacts on Mostorod, where ERC is based, and the surrounding communities. We were impressed by EFG Hermes Investment Banking's responsive work in raising c.USD 462 million in equity for the project.”